True or False? A Pay Raise Will Boost Your Credit Score

Surprise! Consumers are confused about what goes into a credit report and a credit score. Given how opaque these things were for such a long time, it's entirely predictable that confusion reigns, and it'll be that way for a while. Credit bureau TransUnion released a survey Thursday with more proof that the mythology built up around credit reporting will take a long time to undo. Heck, apparently one in four Americans think the sun revolves around the Earth, so fixing this will take a while.

The myth that I think will be hardest to beat back is the notion that income or assets have anything to do with credit reporting. They don't, even if they should. You might have $1 million in the bank, or have just landed a huge raise, but you'll be denied a credit card if your credit score is low or you have a thin credit file.

TransUnion found that about half of American adults think a pay raise bumps up their credit score. And even people with good credit are confused about what went into that good credit. Some other findings from its online survey of about 1,000 people:

Which payments affect credit scores: Nearly half erroneously identified rent (45 percent) and cell phone (47 percent) payments as directly affecting their score; yet, these aren't regularly reported to credit bureaus. (Consumers with excellent credit were even more confused on this point, with 49 percent holding the mistaken belief that rental payments are included in their report.)

Information in credit reports: Among survey respondents who checked their credit report in the last 30 days, about half mistakenly believe their full employment history (55 percent) and income level (41 percent) are included in their reports. (They aren't.)

Pay raises: Nearly half (48 percent) of respondents who've checked their credit report in the last year incorrectly believed an increase in income improves their score. (Income is not part of the credit scoring system.)

Trended information: 70 percent of those who've checked their report in the last year incorrectly assumed that it reflected recent changes or trends in their finances over time. (Only credit events -- not the size of your bank account -- have an impact.)

Paying down debts: 61 percent of those who checked their report in the last 30 days erroneously believed paying off debts from late payments automatically increases their score. (It does help, but the improvements take time.)

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